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U.S. Now Top Oil Producer

The United States has officially surpassed both Saudi Arabia in terms of crude oil production. In 2014, the U.S. had already exceeded both Russia and Saudi Arabia in hydrocarbon, oil and natural gas, production. The U.S. Energy Information Administration (EIA) recently predicted that such high production is likely to continue into the future, with an expected 9.4 million barrels a day this year and 9.3 million barrels a day for 2016.

Adam Sieminski, U.S. EIA administrator, said:

Despite the large decline in crude oil prices since June 2004, this May’s estimated oil output in the United States is the highest for any month since 1972.

U.S. producers have managed to maintain production levels by becoming more efficient and generating new cost savings. Lower prices have led to many labor cuts, with a loss of nearly 100,000 energy-related jobs. Some companies have cut up to 40 percent of their service and supply crews. By April 2015, only 750 rigs were still in operation compared to 1,596 in October 2014.

Industry insiders were not surprised by the EIA report and had previously expected production to keep steady while the growth rate slowed. With prices hovering around $60 a barrel, shale oil exploration is still profitable and will continue be an important source of production.

The Organization of Petroleum Exporting Countries’ (OPEC) plan to cut prices and hurt high-cost U.S. shale producers, however, remains unchanged. On June 7, OPEC announced it would keep production levels unchanged despite pressure from countries within the organization to lower production and increase price.

Fawad Razaqzada, a technical analyst at the trading website FOREX.com, commented on OPEC’s influence saying:

The cartel is losing some influence to the U.S. shale oil market and to a lesser degree Russia, but it still remains a dominant force ― just not as powerful as before.

 

Jun 15, 2015 | Leave a Comment | by

Germany Leads Charge for New Emission Commitments at G7

German Chancellor Angela Merkel won a key victory in her fight against climate change when the G7 agreed to adopt emission targets to limit the increase in future global temperatures. Chancellor Merkel had hoped the G7 would adopt these measures to show a united front prior to the climate summit in Paris this December.

The G7 plan aims to meet an emissions target outlined by a United Nations recommendation to reduce emissions in 2050 from 40 to 70 percent below 2010 levels. Many believe this would be enough to stop global temperatures from reaching dangerous levels.

It would, however, also come at a very high cost as many utility plants using fossil fuels would have to be shut down permanently. The cost of reducing emissions comes at an especially heavy price for developing countries, who simply cannot afford to divest from traditional forms of energy.

During the summit, Canada and Japan were the most hesitant to sign these commitments. Since the 2011 Fukushima nuclear accident, Japan has had to rely more heavily on coal, while Canada has seen economic growth opportunities from the oil boom in the Alberta tar sands. Pressure from both President Obama and Chancellor Merkel eventually convinced the two countries to sign onto the commitments after they had worked to water down the statement.

These commitments follow five controversial years in which five of the G7 countries have increased their coal use. While pressuring developing countries to lower emissions, Great Britain, Germany, Italy, Japan and France have burned 16 percent more coal in 2013 than in 2009. Only the United States and Canada have lowered their emissions, due to a boom in natural gas consumption. The Stockholm Environment Institute also reported that developing countries were on track to reduce emissions more than industrialized nations.

For now, the commitments come without specific plans to lower emissions. Environmental lobbyists criticized the lack of real plan, saying the countries’ failures to agree to their own immediate binding emission targets weakened the promise of reduced emissions.

 

Jun 10, 2015 | Leave a Comment | by

Oklahoma Follows Texas to Prohibit Hydraulic Fracturing Bans

On Friday, May 30, 2015, Oklahoma became the second state to officially ban local bans on hydraulic fracturing. The bill prohibits bans on hydraulic fracturing, as well as other oil and gas drilling operations. The three-person Oklahoma Corporation Commission will now continue to act as the main regulator of oil and gas operations in the state.

Governor Mary Fallin said:

Corporate Commissioners are elected by the people of Oklahoma to regulate the oil and gas industry. They are best equipped to make decisions about drilling and its effect on seismic activity, the environment and other sensitive issues.

The bill was written in response to proposals to increase oil and gas drilling regulations in major cities and as an increasing number of Oklahomans become disgruntled with the mounting number of earthquakes. Sponsored by leaders in the Oklahoma House and Senate, the bill passed the House by a vote of 64-32 and the Senate by 33-13. Amendments to the original bill will still allow cities and municipalities to place “reasonable” restrictions on oil and gas operations, such as setbacks, noise, traffic and fencing regulations.

The bill comes at a time of great controversy within Oklahoma as the Oklahoma Geological Survey recently said increases in earthquakes were “very unlikely to represent a naturally occurring process.” In February, the U.S. Geological Survey published a paper written by Oklahoma Seismologic Austin Holland stating that the increase in seismic activity in Oklahoma was from human-induced activities.

Kim Hatfield, chairman of the regulatory committee at the Oklahoma Independent Petroleum Association (OIPA) responded:

This is something the Oklahoma Geological Survey, Oklahoma Corporation Commissions and OIPA have been working on for well over a year. We knew this was a possibility.

Oklahoma’s oil and natural gas producers have a proven history of developing the state’s oil and natural gas resources in a safe and effective manner.

 

Jun 08, 2015 | 4 comments | by
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